The Indian Air Forceâ€™s (IAF) plan to replace the ageing Russian transport aircraft, Avro, has hit another airpocket with no global vendor showing interest in bidding for the $3.5-bn project. This has forced the defence ministry to extend the deadline for seeking price bids to October, the fourth extension in the last 18 months.

This will be the first time India will see a private consortium come up in a military aviation. Until now, the military aviation business has been dominated by Hindustan Aeronautics (HAL). Senior officials told FE that â€œa request for proposal (RfP) was issued under â€˜buy and makeâ€™ Indian to foreign vendors in May, 2012. The RfP makes it mandatory for them to select an Indian partner from the private sector.â€

The IAF has to acquire 56 transport aircraft to replace its ageing Avro fleet. In a tender issued on May 9, 2012, the defence ministry had bypassed PSUs like HAL and said new aircraft will be produced by Indian private sector firms.

The tender was issued to eight foreign vendors, including Swedish Saab, Russian Ilyushin, European Airbus Military-Casa C-295, Italian Alenia C-27J Spartan and Brazilian Embraer, and they will have to find an Indian partner to produce 40 aircraft within India.

â€˜Buy and makeâ€™ cases require the Indian production agency (IPA) to be approved by Defence Acquisition Council (DAC). Though the IPA can be from the public or private sector, in practice, DAC somehow always ends up nominating a defence public sector undertaking (DPSU) as the IPA.

At a DAC meeting in July this year, defence minister Arun Jaitley pushed through a provision that the private sector will be the sole player in making 56 transport aircraft to replace the Avros, dealing HAL right out of the competition. Indiaâ€™s private sector firms like Tata, Reliance, and L&T are expected to look for a foreign partner, and to use a foreign design, with 16 planes built abroad and 40 in India.
â€œRight now there is no infrastructure for private players who would be bidding for the Avro project. They would have to buy and build facilities that include airport rights and a production line. That may be hard to amortise over 40 planes,â€ explained an industry source.

According to those in the MoD, the deal saw a poor response with only two foreign manufacturers, also called original equipment manufacturers, turning up on August 28, the last date of submission of proposals, forcing the ministry for a fourth extension.

Senior IAF officers acknowledged that an extension of a further eight weeks has been given. This was done keeping in mind the request received from the vendors.
So far, the Avro replacement programme has been a difficult one. Unfortunately, there are no guidelines laid out by the MoD for selection of an IPA from the private sector, which could lead to trouble later, especially if there is just one company making the equipment/platform that MoD intends to buy.

The Indian Air Forceâ€™s (IAF) plan to replace the ageing Russian transport aircraft, Avro, has hit another airpocket with no global vendor showing interest in bidding for the $3.5-bn project. This has forced the defence ministry to extend the deadline for seeking price bids to October, the fourth extension in the last 18 months.

This will be the first time India will see a private consortium come up in a military aviation. Until now, the military aviation business has been dominated by Hindustan Aeronautics (HAL). Senior officials told FE that â€œa request for proposal (RfP) was issued under â€˜buy and makeâ€™ Indian to foreign vendors in May, 2012. The RfP makes it mandatory for them to select an Indian partner from the private sector.â€

The IAF has to acquire 56 transport aircraft to replace its ageing Avro fleet. In a tender issued on May 9, 2012, the defence ministry had bypassed PSUs like HAL and said new aircraft will be produced by Indian private sector firms.

The tender was issued to eight foreign vendors, including Swedish Saab, Russian Ilyushin, European Airbus Military-Casa C-295, Italian Alenia C-27J Spartan and Brazilian Embraer, and they will have to find an Indian partner to produce 40 aircraft within India.

â€˜Buy and makeâ€™ cases require the Indian production agency (IPA) to be approved by Defence Acquisition Council (DAC). Though the IPA can be from the public or private sector, in practice, DAC somehow always ends up nominating a defence public sector undertaking (DPSU) as the IPA.

At a DAC meeting in July this year, defence minister Arun Jaitley pushed through a provision that the private sector will be the sole player in making 56 transport aircraft to replace the Avros, dealing HAL right out of the competition. Indiaâ€™s private sector firms like Tata, Reliance, and L&T are expected to look for a foreign partner, and to use a foreign design, with 16 planes built abroad and 40 in India.
â€œRight now there is no infrastructure for private players who would be bidding for the Avro project. They would have to buy and build facilities that include airport rights and a production line. That may be hard to amortise over 40 planes,â€ explained an industry source.

According to those in the MoD, the deal saw a poor response with only two foreign manufacturers, also called original equipment manufacturers, turning up on August 28, the last date of submission of proposals, forcing the ministry for a fourth extension.

Senior IAF officers acknowledged that an extension of a further eight weeks has been given. This was done keeping in mind the request received from the vendors.
So far, the Avro replacement programme has been a difficult one. Unfortunately, there are no guidelines laid out by the MoD for selection of an IPA from the private sector, which could lead to trouble later, especially if there is just one company making the equipment/platform that MoD intends to buy.

The Hawker Siddeley HS 748 is a medium-sized turboprop airliner originally designed by the British firm Avro in the late 1950s as a replacement for the aging DC-3s then in widespread service as feederliners.

The 748 Series 1 and Series 2 were also licence-produced in India by Hindustan Aeronautics (HAL) as the HAL-748. HAL built 89 aircraft in India, 72 for the Indian Air Force and 17 for the Indian Airlines Corporation.

The Hawker Siddeley HS 748 is a medium-sized turboprop airliner originally designed by the British firm Avro in the late 1950s as a replacement for the aging DC-3s then in widespread service as feederliners.

The 748 Series 1 and Series 2 were also licence-produced in India by Hindustan Aeronautics (HAL) as the HAL-748. HAL built 89 aircraft in India, 72 for the Indian Air Force and 17 for the Indian Airlines Corporation.

Last week Fumihiko Ike, Hondaâ€™s global Chairman, pointed out what we knew all along, that doing business in India is tough and very challenging. In his words, processes here are â€˜complicatedâ€™ and â€˜burdensomeâ€™. Itâ€™s time we figured these are but polite euphemisms for â€˜corruptâ€™ and â€˜harassingâ€™.

He is the third MNC boss to say this in two days. To iterate that â€˜poor infrastructureâ€™ (read, a decadent policy framework) and an uncertain tax regime make it impossible for anyone to invest serious money out here. His statement comes a day after Vodafone said the same thing. And so did European oil major, BP.Times Of India | Blogs

The bigger concern is An-32 upgrade which has run into rough weather. India can and should do An-32 upgrade locally by hiring Ukraine engineers. HAL Kanpur together with private industry can pull this off.